Saturday, May 31, 2014

Spot The Odd One Out

According to the most recent CapitalIQ data, the single biggest buyer of stocks in the first quarter were none other than the companies of the S&P500 itself, which cumulatively repurchased a whopping $160 billion of their own stock in the first quarter!
Should the Q1 pace of buybacks persist into Q2 which has just one month left before it too enters the history books, the LTM period as of June 30, 2014 will be the greatest annual buyback tally in market history.
And now for the twist.
Unlike traditional investors who at least pretend to try to buy low and sell high, companies, who are simply buying back their own stock to reduce their outstanding stock float, have virtually zero cost considerations: if the corner office knows sales and Net Income (not EPS) will be weak in the quarter, they will tell their favorite broker to purchase $X billion of their shares with no regard for price: the only prerogative is to reduce the amount of shares outstanding and make the S in EPS lower, thus boosting the overall fraction in order to beat estimates for one more quarter.
The USD is getting dumped; bond yields are tumbling; VIX is hgher; credit spreads are pushing wider... and stocks are (drum roll please) pleasantly green...

Good job those S&P firms are buying back all these shares from the retail and hedge fund sellers... as we noted earlier:
So the next time someone asks who keeps on buying stock despite all the negative newsflow, despite the bond yield sliding ever lower despite relentless broken-record pleas that a "recovery is just around the corner", and with vol near all time lows confirming peak complacency... now you know.

Friday, May 30, 2014

Encouraging cross-border convergence

13 days to go


As this year’s IFN Asia Forum draws to a close, we reflect on a week of renewed ties and cultural connections during what was another exceptional event for the Islamic finance industry. Collaboration and integration are vital to progress, and this week we are delighted to be able to highlight one of the sector’s success stories with an exclusive interview from the CEO of the ICD, Khaled Al-Aboodi, who gives us a unique insight into the organizations exceptional industry coverage – including some exciting new developments coming up next year.

Our IFN reports this week run from an analysis of the GCC equity cycle to an evaluation of the latest Sukuk trends; as well as an update on the latest news from the FAA, a look at the recent mid-term review from the IFSB, new developments from Indonesia regarding IILM involvement, our weekly Sukuk race round-up, and a discussion by industry leaders on the urgency of institutional involvement to drive forward the capital markets.

Our IFN correspondents cover Qatar and Nigeria, while our case study looks at the new RHB Sukuk issuance and our in-house analysis reports explore retail and microfinance as well as looking at the potential for Islamic finance in Hong Kong and China. We bring you special reports from Muhammad Shoaib Ibrahim from First Habib Modaraba on new Sukuk issuance in Pakistan; and Roshan Madawela brings us an update on the recent Sukuk event held by UMEX in London. Amirali Bakirali Nasir contributes a feature on the current transitional phase in Hong Kong; R Lakshmanan discusses the complexities of Islamic banking conversion. Our book excerpt this week is provided by Benedikt Koehler from his latest publication: ‘Early Islam and the Birth of Capitalism’.

Our jam-packed issue is brought to you this week from the bustling halls of the IFN Asia Forum 2014, and we thank all the delegates, participants and speakers for once again contributing to a stellar event.

Cover Story

The Islamic Corporation for the Development of the Private Sector (ICD) is one of the most influential development agencies in the Islamic finance arena: supporting vital enterprise initiatives across over 50 countries, within multiple sectors and through a variety of strategies. Islamic Finance news caught up with CEO Khaled Al-Aboodi this week for an exclusive interview to discuss the pivotal role the multilateral organization plays within the global Islamic finance arena: along with exciting new plans for the future, an aggressive new expansion policy - and an unique peek into its own plans for tapping the capital market. (Click to read full report)

IFN Asia Forum 2014:

Shariah Pronouncement:

An Islamic bank’s customer has recently been awarded facilities in relation to a large developmental project the customer has won in a tender (Click to read full report)

IFN Reports:

Market Report:

IFN Country Correspondent:

IFN Country Analysis:

IFN Sector Analysis:

Special Reports:

Case Study:

Debut Sukuk program: RHB Islamic (Click to read full report)


The goal of recent legislative changes is to diversify the financial platform and enhance Hong Kong’s financial market so as to make it even more competitive on an international level. A religiously neutral approach has been adopted and is reflected in the neutral language of the ordinance, which is to be lauded as it focuses on the substance of Shariah rather than on its Arabic terminology... (Click to read full report)

As Islamic banking continues to grow globally on a double digit basis (approximately 17% in 2013) and is growing much faster than conventional banking in several markets, many countries, regulators, investors and existing conventional financial institutions are introducing or converting to Islamic banking. R LAKSHMANAN takes us through the process... (Click to read full report)

Book Excerpt:

Economics in early Islam soon evolved a practical bent. Muhammad pronounced: “There is nothing wrong in wealth, but health is better than wealth, and cheerfulness is a blessing,”and even was quoted having issued straightforward investment advice such as: “He who sells a house and does not buy another one instead is not likely to see blessing in that money.”... (Click to read full report)


REDmoney Events


Hong Leong Islamic Bank joins Basel III Sukuk issuers by establishing Tier 2 capital Sukuk of up to RM1 billion (US$311.19 million)
Filipino government considering issuing sovereign Sukuk in a bid to diversify funding sources
Indonesia appoints CIMB Group, HSBC and Standard Chartered as arrangers of US$1.5 billion sovereign Sukuk issue
Saudi Telecom Company hires banks to manage potential Sukuk issuance and initiates meetings with potential investors
IILM re-issues US$490 million short-term Sukuk to eight primary dealers excluding KBL Private Bankers
Pembinaan BLT’s sixth Sukuk installment receives overwhelming demand at 3.4 times bid-to-cover ratio on initial RM1 billion (US$311.39 million) deal size
Dar Al Arkan concludes Sukuk sale, raises US$400 million


ICD-backed Ijarah leasing company to be established in Kyrgyzstan
United Bank chairman anticipates Islamic banking in Egypt to grow by 50% this year
Mauritius welcomes another Islamic finance player as central bank grants Habib Bank with a license to launch a Shariah compliant window
Affin Holdings to see 10% rise in earnings in 2015 and 2016 as a result of Hwang DBS acquisitions according to Alliance Research
International Finance Corporation obtains approval for due diligence as it contemplates a minority investment in Bank Alfalah
Meezan Bank to reach customers in remote areas with energy-efficient ATMs
Federal Land and Development Agency ready to supply Halal goods to Lulu hypermarkets
State Bank of Pakistan grants approval in principle for Meezan Bank’s bid to purchase HSBC Pakistan
Head of Turkish business association calls for a clean-up of the world’s economic system using Islamic principles
Malaysian firms face the highest interest rates on Islamic borrowing costs in three years as central bank indicates possible adjustment to monetary accommodation
Securities Commission Malaysia tightens rules on Bai Inah in a bid to encourage Islamic banks to move towards other alternative models
Malaysian government seeks to double share of Islamic finance to 40% of all financing in the country by 2020
Islamic banking sector on the agenda at the fifth European-Gulf economic dialogue
World Bank in talks with prospective sovereign Sukuk issuers with offer of guarantee in line with plans to involve itself in Islamic finance
National Bank of Abu Dhabi receives Indian license, according to sources
Islamic Financial Services Board launches the Islamic Financial Services Industry Report 2014
Moody’s addresses demand for Islamic finance credit ratings and research by launching global Islamic Finance Group
Islamic finance industry was not completely immune to the global financial meltdown, IFSB report shows
Abu Dhabi Islamic Bank forges ahead with major expansion plans
Qatar Investment Authority invests US$2 billion in Russian Direct Investment Fund
ICD proposes MoU to enhance investments in Cooperation of Shanghai member countries
Savola Group divests assets and operations of edible oils in Kazakhstan to Russian firm for SAR107 million (US$28.53 million)
MENA small and medium enterprises face funding gap of up to US$240 billion, according to World Bank report
Abraaj Group acquires stake in Thai out-of-school education provider
IDB pledges US$2 billion in financing to Kazakhstan for 2015-17
UAE urges GCC countries to hasten coordination between states to keep up with rising economic needs, population and projects underway
More Islamic finance activities expected in Africa over the medium-term, according to report
ISFIN partners with Islamic Corporation for the Insurance of Investment and Export Credit to enhance relations between Islamic markets
MENA companies upbeat about M&A volume growth despite drop in figures for the first quarter of the year
Worldwide socially responsible investment market worth US$11.2 trillion, according to IFN Asia Forum speaker
It is high time for AAOIFI to review its Shariah standards with the help of young Shariah scholars, says Shariah banking expert
Abu Dhabi Commercial Bank expands outside overcrowded UAE into London as part of strategic expansion plans
Unsophisticated regulation is one of the reasons behind high cost of Islamic transactions but the price gap is narrowing, according to IFN Asia Forum panellist
Emirates NBD launches tablet-based financial planning for priority banking and wealth management operations
French investment bank plans to recruit more staff in the Middle East for Islamic finance business this year
Budget deficit for Kuwait inevitable as predicted by IMF and World Bank, according to finance minister
National Bank of Abu Dhabi plans for growth include expansion across the West-East corridor
UAE central bank debates memorandum with China at third meeting of the year
Beirut Stock Exchange to attract Sukuk listings with the introduction of new electronic trading system
Hill Top UK declares extraordinary dividend of 1.5% for shareholders as a result of outperformance in asset that was partially funded in a Shariah compliant manner
Bank Sohar launches dedicated corporate website for Islamic banking operations
Banks in Oman in comfortable capital level to withstand severe shocks to the economy, says central bank
Bank AlJazira announces shareholder approval of capital increase
Abu Dhabi Islamic Bank contemplates dropping the word ‘Islamic’ from name to penetrate foreign markets
Al Mazaya Holding partially restructures existing debt into Shariah compliant financing facility
Subdued financing power of banks likely to push companies to tap Sukuk market, says CEO of Saudi Fransi Capital
Investors will be worst hit if Dubai property market experiences another crash, according to S&P report
IPO plans for Khalifa bin Salman port, according to Bahrain’s ministry of transportation
Emaar Malls Group to list 25% of shares on Dubai Financial Market
Emirates REIT announces proposed total final dividend of US$14.98 million for 2013
Total bank deposits in the UAE up 2.5% in March to reach AED1.33 trillion (US$360.09 billion), according to central bank
Omani businesses should learn to utilize Islamic finance effectively, according to industry player
Kuwait Finance House announces new investment plans for education, marriage, youth projects and retirement
Banque Saudi Fransi agrees SAR528 million (US$140.76 million) Murabahah bridge financing deal with Ports Development Company
Kingdom Holding Company ups investment in by 130% following successful investment in Twitter
Meethaq agrees to provide Daleel Petroleum employees with Shariah compliant car financing deal
Saudi businessmen urge India to sanction Islamic finance in order to strengthen trade and economic ties between both countries
Global Investment House announces net profit of KWD3.1 million (US$10.98 million) for the first quarter
Growth in Islamic banking income pushes AMMB Holdings’ fourth quarter profit up by 15%
Syarikat Takaful Malaysia concludes first quarter with higher net profit


Islamic banking has the potential to capture a 6-8% share of Oman’s system assets in the next three to five years, according to Moody’s analyst
Parent company of AmMetLife Takaful eyes to move up the ranks to become Malaysia’s top five insurance provider within the next five years
Capital Market Authority imposes penalty on insurance companies for violating Listing Rules
Alinma Tokio Marine Co receives temporary approval for its insurance products
Hong Leong MSIG Takaful signs MoU with Al Madinah International University on talent development
Sun Life Financial to spend US$40 million to enhance Takaful distribution strategy in Indonesia
Sindh High Court lifts stay order rendering Takaful Rules 2012 effective, Islamic insurance window operations now permissible
FWU Global Takaful Solutions may look east to raise funds through its US$100 million Sukuk Wakalah program, says deputy CEO
Al Rajhi Takaful engages Aldukheil Financial Group as financial advisor for its rights issue
Analysts highlight Takaful Ikhlas and Syarikat Takaful Malaysia as possible candidates for potential M&As
The Securities and Exchange Commission of Pakistan expects up to half of the conventional insurers in the country to apply for Takaful window license


Growing Islamic banking franchise leads Moody’s to assign ‘baa2’ baseline credit assessment to Bank Albilad
TNB Northern Energy’s RM1.63 billion (US$506.77 million) Sukuk receives ‘AAAIS’ rating
Moody’s affirms ratings for Qatar International Islamic Bank with a positive outlook
RAM assigns an ‘AA3/Stable/P1’ rating to Turkiye Finans Katilim Bankasi
Bank Muamalat Indonesia receives ‘A (idn)’ rating from Fitch
RAM maintains ‘AAA’ ratings on Telekom Malaysia’s Islamic debt programs
Golden Agri-Resources’ vertical integration strategy deemed credit positive by Moody’s


Arab Financial Services names executive vice-president of Arab Banking Corporation as new chairman
Gatehouse Bank picks Arcapita’s General Counsel as new CEO with immediate effect
National Bank of Abu Dhabi selects Tony Zeiger to head investment group in Switzerland
Former chief of National Bank of Oman joins Alizz Islamic Bank as CEO
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